The QBE Insurance Group Ltd (ASX: QBE) share price is down 2.75% to $9.93 today at the time of writing after investment analysts led by Shaw and Partners placed a sell rating on the stock.
QBE is Australia’s largest global insurer with operations in 37 countries and over the last decade, the company has struggled to maintain its operational efficiency after many years of expansion overseas.
Long suffering shareholders who had hoped that management were steadily improving underwriting performance were disappointed when the company announced as part of its half year results a combined operating ratio of 110.9% for its emerging markets business.
Investors will hope that under the leadership of Pat Regan who was recently appointed as the successor to CEO John Neal, QBE can finally turnaround its operations and profitability around the world. Pat Regan is currently the CEO of QBE’s Australia and New Zealand business which had a much better half year combined operating ratio of 92.5%.
QBE’s global footprint remains attractive for investors looking for foreign income to hedge against the Australian dollar. It provides a partially franked dividend yield of 5.4% and as the interest rate cycle looks to be reaching an inflection point, this could improve QBE’s profitability in the long run.
The underlying issue remains that QBE operates in a competitive insurance market which has affected its pricing power. Investors might need to wait a little bit longer to see if the company can change its fortunes under the leadership of Pat Regan.
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The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.
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